ERP or WMS?

Recently, there has been a tendency to implement part of the functionality of WMS systems in ERP systems and, conversely, part of the functionality of ERP systems in WMS systems.

The definition of ERP

ERP systems are characterized by the use of a single transactional system for the vast majority of operations and business processes of the organization, as well as the obligation to bring all operations into a single database for subsequent processing and receiving operational reporting.

The definition of WMS

WMS class systems are designed for real-time management of technological operations inside the warehouse. (In this case, atomic operations are considered as operations-actions: take a box, put a box, count a box, etc.).

Most companies that face the need to implement a warehouse management system, first of all, consider the feasibility of its acquisition from existing vendors in the market. What decision will be correct: the creation of a system internally or purchase ready-made solutions?

It is certainly possible to create a full-fledged warehouse management software product from scratch in accordance with the current management's view of the business functioning. But will this system be suitable, for example, for other warehouses of the company, for its branches? How quickly will the investment pay off? How to develop a logistics model of the warehouse? There should be a lot of questions.

The implementation of the system is not an end in itself. Its task is to optimize logistics and production business processes. Companies that start to develop the system on their own, often forget about it. Most of them do not have highly qualified logistics specialists who can take into account all the options for the development of the warehouse business in the future.

To determine whether the built-in module of the ERP system is sufficient for the warehouse automation or it is necessary to implement a full-featured specialized WMS system, it is necessary to analyze a number of their parameters, namely:

Compliance of the product with goals of implementation

Cost-effectiveness of implementation

The architecture of the system and its performance

System functionality

Need and ability to work in real time

Cost and convenience of use of the system

Let's take a closer look at these parameters:

Compliance of the product with goals of implementation

The basis of any project should be answers to a number of questions: why do we do it? What should current problems be solved? To achieve what long-term goals? What are the requirements of our customers we want to meet? What place do we want to take in a competitive environment? How fast do we want to grow? How do we measure the achievement of these goals? How will our business processes change? What experience, business technologies and IT solutions will be required?

If the company plans to develop at a high pace, the development of warehouse logistics must meet the relevant requirements.

Cost-effectiveness of implementation

There is a misconception that the presence of a built-in warehouse module can significantly save the project budget. Of course, on the one hand, there is indeed a saving on the integration of WMS with ERP, which in the case of products on a single technology platform is not so significant. But on the other – there are a lot of problems, the solution of which can lead to much greater costs in the implementation and the loss of benefits from automation in the future.

Choosing between WMS and ERP, you need to answer the following questions: is there all the necessary functionality in the ERP module now and in the future? Will the ERP module be able to easily integrate with special storage equipment-conveyors, shuttles and other devices? How much will it cost to develop all the necessary features? Is it possible in general for an ERP system?

When making a decision, it is necessary to evaluate not only the obvious investments and/or savings, but also the pitfalls of the chosen solution, as well as to answer the questions: what will the chosen solution give to the company now and in the future? Growth or reduction of staff? Additional human efforts in data processing or automation of decision making? Will the system interfere with people or help to work faster, easier, more accurately?

Architecture and performance

As mentioned above, ERP and WMS belong to different classes of systems.

Architecturally, this is that WMS is bigger and better "sharpened" to work in real time with fast atomic transactions (took, put, counted, etc.) and fast response to them (less than 1 second). At the same time, ERP is more "sharpened" to work with large transactions with batch processing (a classic example is a multiline document). As a rule, the reaction to such transactions is more than 1 second.

With the architectural construction of the system is closely linked to its performance to solve other problems.

From the warehouse point of view, technological productivity is more important, i.e. the ability of the system to handle a certain number of warehouse operations. This performance is achieved not so much by the performance of the server equipment, but by the ability to plan and perform operations in the warehouse in real time.

It is obvious that the technical performance of ERP is much inferior to WMS. Therefore, when making a decision, think: is it possible in your warehouse to have large deliveries? And multiple shipments at the same time? How long is the buyer willing to wait for your item until you slowly process it in your warehouse? Do you lack space in the selection area? Do you need additional operations for packaging and labelling? If your competitive advantage lies in the speed with which you provide your customers with the product, you can lose it by making the wrong choice.

Functionality

Above we have already partially touched upon the issue of comparing the functionality of the ERP and WMS warehouse module. Let's try to light it a little deeper.

The functionality of the systems is quite difficult to compare. A person who has never dealt with WMS systems often seems that they are all the same. It's like comparing cars. At first glance it seems that the "Lada" and "Mercedes" are the same: there are wheels, steering wheel, gas, brake, trunk. But if you look closely, you can see the fundamental differences. The same with systems: details are important.

It makes no sense to list overlapping functions, although they are few: address space, basic operations, the ability to work with data collection terminals.

Personnel motivation

The implementation of any system can be useless and inefficient without staff involvement. The introduction of functions of personnel monitoring and calculation of the variable part of the salary of warehouse workers, based on the efficiency of their work, is a very effective mechanism for improving the efficiency of the warehouse.

Real-time operation
Most of the operations are entered into the ERP system by users working in it, on the basis of the data obtained from it and their own considerations.

The standard scenario of ERP

The user creates an order to the supplier based on the data on the need for materials or makes data on the sales forecast based on the analysis of data from previous periods. In most WMS systems such "typical" users are absent (or minimized), and the bulk of decisions are made by the system itself.

The standard scenario of WMS

The system automatically receives data on shipment orders and, based on this information, plans all warehouse operations: groups orders into "wave" and launches it into work, issues tasks for selection, recharge, packaging, shipment. At the same time, the main task of the WMS system is not so much the planning of these tasks as the ability to distribute them among resources in the correct order and at the right time so that they are executed in the most optimal way and exactly on time. In this mode of operation, user intervention is necessary only in case of emergency situations.

To sum up, in the concept of WMS system manages resources (users), and in the concept of ERP, users work in the system. This approach allows the WMS system to achieve real-time work due to the maximum exclusion of users from the decision-making process.

WMS and ERP have different technological orientations.

WMS is a system that manages employees with a large number of "small" transactions with a minimum reaction time (less than 1 second). ERP office system, controlled by staff, with fewer "big" transactions, but with longer lead times.

In ERP transactions and adjustments of documents retroactively have meaning, and in the WMS any action not in real time do not make sense.

Storing data for a long period (more than 1 year) in the ERP makes sense, in the WMS does not make much sense. Archiving of WMS should be performed 1 time in 10 minutes because it is impossible to restore data in WMS on paper, you will have to make an inventory of cells with which you worked during this time. ERP can be archived 1-2 times a day.

In this regard, the mode of operation of the two systems is different: different backup periods, different periods of archiving of old data, different approaches to support, data protection, rights sharing, different update regulations.
Management should understand that it is only possible to improve the efficiency of the business and receive the result by implementing WMS or ERP over time. The problems associated with the transition to a new method of work are also inevitable.

First, the staff will have to learn a lot and get used to working in a new way. WMS will require fundamental changes in all work processes, which for most will be a stressful situation. You have to be prepared for the fact that not everyone will agree to accept such radical changes and some employees will have to leave. Some of the staff may overtly or covertly sabotage changes that also will not speed up the process of transition. Training of staff always requires a lot of effort, time and money, and if you try to save on this, there will be only more harm.

Secondly, the external environment is also unlikely to be ready for significant changes. Any large trading company has a large number of suppliers, each of which is used to working in its own way, and the WMS or ERP impose strict requirements for the acceptance of goods. For example, a large number of unmarked goods in the goods flow will cause problems in the warehouse and greatly slow down its operation. Therefore, it is necessary to build relationships with suppliers in advance, developing common rules for the shipment of goods.

Third, you need to take into account the scale of growth of the company and the need for further expansion. This factor should be kept in mind when designing a warehouse and building long-term forecasts for the development of the enterprise.

Finally, you need to be aware of the difficulties of the transition period. No company can afford to stop the work of the warehouse for the period of implementation of the automated system. We must be prepared for the fact that some time the work of the warehouse will be irregular, there will be inconsistencies and errors. In addition, the WMS must collect initial information about the goods and their storage locations. At this stage, well-established communication within the company is extremely important: only a good mutual agreement will allow settling the misunderstandings as quickly and clearly as possible.

When deciding which system to buy to manage the business, its owners should be ready for an impressive list of different software solutions, each of which has its own technical features and advantages. There are two fundamentally different approaches to the market of logistics management systems: ERP and WMS

However, how efficient WMS or ERP will depend only on the professionalism of the developers, as well as their ability to take into account all the needs of the enterprise.

The beginning of cooperation with IaaS provider is a serious step for any company in the direction of cost optimization and new opportunities for business growth. At the same time, you should not forget how the use of new tools will affect the already established business processes and the work of the company.